EU's deceptive calm

Spainand Italy can live with the interest rates they have to pay on the open market for now. The European Central Bank has spread out a big safety net by looking to buy up unlimited amounts of state bonds as and when necessary. Greece is staying in the eurozone. And now the European Union has won a wonderful Nobel Peace Prize. Put all that together and you have ensured a short period of calm and near relaxation among Europe's heads of state and government in Brussels.

That's why they gave themselves the gift of a contemplative summit that lasted long into the night without bringing many concrete results. The atmosphere was perhaps deceptive. The debt crisis may be on a break, but it's certainly not over. There is no reason for complacency. The European leaders decided to establish a single banking supervisor who will begin work in about a year's time. That's not exactly a big surprise as it was clear that setting up a competent authority to oversee more than 6,000 banks would take more than a couple of weeks.

The direct capitalization of crisis-hit banks from a bailout fund that Spain, Italy, France and even finance markets were dreaming of has been put off. The risks are too big and there was too much opposition from Germany, where the accepted opinion is that those countries were trying to create a new way to create collective debt mechanisms out of risky banking business or a new life-support system for ailing banks. Such a system would not break the vicious circle of banking debt and sovereign debt, they argued, but whether investors will be satisfied over the long-term is also highly dubious.

The EU is still at the very beginning with its new economic structures. The suggestions from European Council President Herman Van Rompuy are still murky. The revolution has not taken place. There are clearly still intense differences about the future of the eurozone and the European Union between the solvent countries in the north and indebted ones in the south.

To avoid establishing shared debt or debt redemption, German Chancellor Angela Merkel suggested a new solidarity fund. Though its size and financing were unclear, it was a move to win over supporters of eurobonds.

Few member states wanted an über-finance commissioner with the right to reject national budgets, a proposal that only Germany seemed to be behind. A decision on the matter is to be made in December, but it's going to take a lot of effort, since by then it will be clear to what extent European treaties will need to be changed. And treaty changes are a red rag to a bull to some member states. Several governments fear that they will not be able to ratify the altered treaties in their countries. Germany might even need to change its Basic Law or even vote on a new constitution. None of that will happen until after German parliamentary elections in September 2013.

Until then, everyone will be running down the clock. That will work for as long as the financial markets play along, but should Spain or Italy come under intense interest rate pressure, the eurozone will quickly forget its current relaxation and regress into panic mode. Greece is staying in the eurozone and will get its next installment of aid. No one at the EU summit refused that - at least not publicly.

Great Britain, for its part, did move a step away from Europe. Prime Minister David Cameron is isolated in his fundamental opposition against everything but the European common market. There's a chance that Britain will end up leaving Europe instead of Greece.